Thanks to Apple’s economies of scale, advanced manufacturing, smart engineering and the latest technological solutions, Apple’s fifth-generation full-size iPad, the iPad Air, is actually cheaper to produce than the third-generation model – despite packing in the latest technology, research firm IHS Suppli has discovered in a new teardown analysis.

Total cost of components that go into the latest iPad is between $274 and $361, depending on the model, which is still $42 cheaper than the entry-level iPad with Retina display. The priciest iPad Air component by and large is its Retina display and the touchscreen assembly.

Both components incorporate a number of improvements such as fewer, more advanced LED lights providing the backlighting to the display and a new type of sensor known as a cycle-olefin polymer (COP) sensor located right underneath the outer layer of Gorilla Glass. More tidbits right bellow…

The $42 difference could easily account for the missing Touch ID on the iPad 3.

According to the teardown findings obtained by AllThingsD, the iPad Air’s display assembly uses only one layer of glass instead of two like before. This has enabled Apple engineers to reduce the thickness of the whole display assembly from 2.23 millimeters down to just 1.8 millimeters.

At an estimated combined cost of $133 (about $90 for the display and $43 for the touchscreen parts), it’s a lot more expensive than before.

The new LED backlighting module achieves the same level of brightness with just 36 LED lights versus 84, which is less than half the LED lights compared to the iPad 3. Fewer LEDs also contribute to the iPad Air’s reduced weight and power consumption.

Rassweiler says that while it’s possible that the LED lights are brighter and more efficient with than in previous models, Apple is also using thin layers of optical film to distribute the light from the LEDs across the entire display.

The iPad Air bill of materials is as follows: the display costs $90, an additional $43 covers the touchscreen components, Qualcomm’s cellular networking LTE chips are $32, Toshiba-made NAND flash storage is between $9 (16GB) and $60 (128GB) and DRAM chips manufactured by Elpida are ten bucks.

As for the Apple-designed, Samsung-manufactured 64-bit A7 processor, it costs $18 per unit, which is five dollars less per unit than the A5 chip cost eighteen months ago. Depending on the model, IHS estimated the iPad Air component costs between $274 and $361.

Other tidbits: the iPad Air’s power management chip is made by Dialog Semiconductor, Broadcom makes a touchscreen controller silicon, Cirrus Logic supplies an audio chip, a gyroscope processor is a STMicroelectronics component, Bosch Sensortec supplies the accelerometer, a compass chip is of AKM Semiconductor variety and Skyworks, Avago Technologies and TriQuint Semiconductor all supply different bits of the wireless technology.

IHS pegged Apple’s gross margins on the iPad Air at 45 percent for the 16GB Wi-Fi only version to as much as 61 percent for the top-of-the-line 128GB cellular variant.

The device retails for $499 for the entry-level Wi-Fi-only model with sixteen gigabytes of storage and all the way up to as much as $929 for a 128GB variant with cellular connectivity. As per usual, these estimates exclude other costs associated with product assembly, marketing, packaging, distribution, cost of sale, licensing, research and development and more.

When their costs increased between iPad 2 and iPad Retina did they charge you more?

Jonathan

Thankfully, no.

Garrett Alkofer

Wow i hate paying $100 more for 16 more gigabytes of storage when it only costs them about $10 more….

Maxim∑

Apple is an expensive company to run..

Kamal Ahmad

If apple sold ipad air for 300 dollars. Almost everyone would buy it, as it would be the tablet with the best specs in that price range.

Eric Wang

If the A7 is cheaper to manufacture than the A5, Apple should at least give the iPod touch a hardware upgrade and start manufacturing it with the A7 chip.

Hyr3m

What about the iPad 4 ? We don’t care about the 3 or the 2… Actually, I don’t care about the Air or the mini either but I just thought it would make more sense to compare the build price of the Air with that of a device that hasn’t been discontinued for a year…

mav3rick

It seems good business… getting $100 for 16GB, 3 times the manufacturing cost…